If the annual cost of goods sold is $10,000,000 and the average inventory is $2,000,000, what is the turns ratio?
A) $8,000,000
B) 5
C) 0.2
D) 20%
E) cannot be calculated from the information given

Question

Quizplus · Accepted Answer

The inventory turnover (or turns ratio) can be calculated as follows:

Inventory turnover = Cost of goods sold / Average inventory

Plugging in the given numbers, we get:

Inventory turnover = $10,000,000 / $2,000,000
Inventory turnover = 5

Therefore, the answer is B, 5.

If the Annual Cost of Goods Sold Is $10,000,000 and the Average